2016 ushered in few major changes, some of them unexpected. They have, of course, had an impact on the UK’s housing market and prices and the general trend has been for house price inflation and activity to slow. With the whole of 2017 still ahead of us, we’ve taken a look at some of the expectations and forecasts for UK house prices over the coming 12 months.
According to data from lender Halifax’s monthly house price index, you can clearly see a slowdown in house price growth from May onwards.
“UK house prices and activity were on the up in the first few months of 2016, but once the tax changes came in and the EU referendum result was announced, things changed, almost overnight,” said Central London estate agent, LDG.
While there were numerous reasons for that change, there were three that stand out most clearly:
- April Stamp Duty Tax change for investors.
- June referendum and resulting vote for Brexit.
- US Presidential vote victory for Donald Trump.
When you consider these – and other developments – it’s easy to see why 2017 house price forecasts are much more downbeat than they were 12 months ago.
Economist’s Forecasts Underscore Pessimism
When it comes to the forecasts and expectations that have been made and published, economists have been the most pessimistic.
“The overall outlook from economists for UK property prices is rather bleak, particularly when you consider prices have been rising strongly for a number of years now,” said Wimbledon estate agent, Robert Holmes.
Liberum investment bank analysts are expecting the average UK house price to decline by 2.5% in 2017. They’ve reached that conclusion due to a combination of uncertainty on the economic front and the Government and Financial Policy Committee’s (FPC) closer watch on the property market, to also bring about a 5% fall in property sales activity.
A 2% house price decline is forecast for the year by Howard Archer, IHS Global Insight’s chief UK and European economist. And that’s despite anticipating a pick-up in prices over the next few months.
Property firm Savills, with its international expertise, has said it expects house prices to end 2017 at the same level they started the year. However, looking ahead to 2018, they are forecasting a slight recovery of a 2% increase.
“Fragile consumer sentiment is likely to offset any boost from low interest rates,” said Lucian Cooke, director of residential research at Savills.
In addition, international property management firm Knight Frank are a little less downbeat on the prospect of UK house prices. They are forecasting UK-wide house prices to rise 1% in 2017 and then by 2.5% in 2018. But, for London, it’s a different outlook. Prices in the capital are expected to decline 1% this year, before recovering and rising by 2% in 2018.
“While the outlook for prices isn’t good from an owner or investor’s perspective, a slowdown in activity and some easing in prices could provide buying opportunities for some first-time buyers who’ve been increasingly priced out of the market,” said Marylebone estate agent, Kubie Gold Associates. “Of course, that’s more likely outside of London, but any pause in price growth is a good time to see what’s on offer.”